Last chance to reclaim VAT for 2009 in EU countris!

As of 1 January 2010, the VAT directive which deals with the cross-border VAT reclaims underwent a change in the entire European Union.

The new system greatly easies the process of reclaiming the VAT from another member state, prolongs the deadline of the application, yet shortens the period of the procedural deadlines.

According to the new system the VAT refund application has to be submitted to the local tax deprtment latest by 30 September of the following calendar year of the refund period.

Since the changes of 2010 are valid for the unclaimed VAT returns of 2009, we would like to stress that Estonian VAT liable persons have an opportunity to reclaim the cross-border VAT paid during 2009 under much easier conditions up to 30 September this year, i.e. during another month.

The application of the return of VAT paid to another member state for Estonian VAT liable persons takes place only through the Estonian tax authorities' electronic portal. The monies are returned directly to the applicant though.

Through the portal the tax liable person can also get information from the tax authority about hte status of the process. The new electronic system works only for the returns within the member states of the EU. The tax return with third states takes still place in a paper format.

The tax advisers of Rimess OÜ have experience in managing the cross-border tax return procedures and process. We are pleased to advise you in your VAT returns under the new terms as well. You can proxy us to carry out the entire process through the electronic tax portal or we can simply advise you how to do it.

In case of questions, please contact us:

tax-legal@rimess.ee; 626 4500
Tax Advisory Department
 

Tallinn sales tax to enter into force from 1 June 2010

Under Regulation No 45 of the Tallinn City Council of 17 December 2009, sales tax will be imposed in Tallinn from 1 June 2010.

Object of taxation
Pursuant to §1(2) of the Sales Tax Regulation, tax shall be charged on goods sold or services provided by taxable persons at or via a place of business located in the territory of Tallinn City to natural persons (excluding to sole proprietors for the purposes of their business activities) in the areas of retail trade, catering or services.
Sales tax will be imposed on the goods sold “at or via a place of business” located in the territory of Tallinn City. According to the new wording, transactions should be assigned to the place of business located in Tallinn even if the transaction was physically concluded outside Tallinn. For instance, goods are sold in a store in Tallinn, delivered to the customer’s home and installed outside Tallinn.

Taxable persons
Taxable persons are traders in the meaning of the Trading Act, who meet the following three conditions:
1. the trader is registered in the register of economic activities;
2. the trader’s place of business as registered in the register of economic activities is located in the territory of Tallinn and
3. the trader operates in the area of retail trade, catering or services.

Main definitions
Trader – means a person (sole proprietor or legal person) or body which, within the framework of the economic or professional activities, offers for sale and sells goods or offers and provides services, including persons operating in a field of activity subject to special requirement and under an activity licence.
Customer is a natural person (excluding sole proprietors purchasing goods for their business purposes).
Goods mean movables offered for sale or being sold. Immovables are exempt from sales tax.
Service means the provision of chargeable amenities in the framework of retail trade, catering or services.
E-trade means the offer for sale or sale of goods or services in the Internet without the parties being simultaneously physically present.
Retail trade means trading activities, where goods and related services are sold to a client, and where related activities may involve the preparation and serving of food.
Catering means trading activities, where food is sold together with its preparation and serving or just its serving for consumption on the premises. Upon catering, related goods may be sold and supplementary services may be provided.
Service means trading activities, where work is performed in accordance with an order placed by a client and whereby a new movable is created or an existing movable or its characteristics are maintained, improved or altered, or possession or use of a movable is granted or taken, or building cleaning services or beauty treatment and personal services (hereinafter services) are offered or provided and goods related to such services are sold.

Rate of sales tax
The rate of sales tax is 1% of the taxable value of the goods and services specified in §1(2) of the Sales Tax Regulation.

Creation of tax liability
The sales tax liability is created upon the dispatch of goods or the provision of services or upon the receipt of payment for goods or services.

Tax exemptions
Sales tax will not be charged on goods and services sold in the framework of e-trade, electricity and heat energy sold via a distribution network, natural gas and water. Furthermore, the exemption also applies to goods and services sold during the journey on watercraft and aircraft, trains and buses, the journey of which begins or ends outside the territory of Tallinn or which leave the territory of Tallinn during their journey. Boats, yachts and launches with the length of 4 to 12 metres subject to technical inspection are also exempt from sales tax.
Sales tax will not be charged on medicinal products, contraceptive products, sanitary and hygiene products, medicinal equipment and auxiliary tools specified in the list established by a decree of the Minister of Social Affairs in accordance with §15(2)2) of the Value Added Tax Act. Certain dairy and bakery products and food products intended for infants will also be exempt from sales tax.

Tax administrator
Pursuant to §6(1) of the Sales Tax Regulation, the Tax and Customs Board and the Tallinn City Enterprise Board will perform the duties of tax administration. The tasks of the Tallinn City Enterprise Board include counselling taxable persons in the area of sales tax, inspecting the calculation of tax and forwarding challenges presented to the Tallinn City Enterprise Board to the Internal City Controller Service of the Tallinn City Chancellery. The Tax and Customs Board is tasked with receiving and checking sales tax returns and giving notice of errors, collecting and returning sales tax, scheduling tax debts and processing the challenges presented to the Tax and Customs Board.

Tax returns
Taxable persons will be obligated to present tax returns to the Tax and Customs Board by the 20th day of the month following the reporting quarter on the sales tax return form established by the Minister of Finance. Tax returns can be sent to the Tax and Customs Board by electronic mail or regular mail or delivered to the offices of the Tax and Customs Board.
Implementation provisions
In the case of long-term contracts concluded before 1 June 2010, sales tax shall be calculated and paid on goods dispatched or made available and services provided starting from 1 June 2010.